The Day After Yesterday: Hospitality in a COVID-19 World

Bradley Arant Boult Cummings LLP
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Bradley Arant Boult Cummings LLP

These are extraordinary times, unlike any we have ever seen. The global COVID-19 pandemic has dramatically altered our lives, both personally and professionally.

Those in the hospitality industry have the added burden of meeting people’s basic needs during these difficult times. They do so in an environment of strict governmental restrictions and dramatically altered social behaviors. These businesses are expense-heavy and operate on a low-margin, making them ill-suited for a protracted period of low income. In short, the hospitality industry is feeling this pandemic more acutely than most.

But those in the industry are uniquely equipped to face this challenge. They are tough, they are strong, and they know how to thrive in the face of adversity and uncertainty. They are the people just crazy enough to open a brewery, or start a food truck, or open a franchise. They’ve been told they won’t succeed time and again. They’ve proven the doubters wrong. And they will again this time.

We write today to provide some measure of comfort that help is on the way, to offer support, and to offer our modest suggestions for carrying on in the meantime.

Keep Providing Services to Customers, Just Do it Differently

Perhaps the most immediate problem faced by restaurants, bars, breweries, and similar businesses is how to serve customers. Since many state and local governments have severely limited or banned onsite food and drink service (and many customers do not want to be out in public), businesses must get creative to continue serving their customers. The good news is that most state and local governments that have made such restrictions are still allowing curbside, take-out, or delivery options. And many states­ — some for the first time ever — are also allowing curbside alcohol sales. Take advantage of this high-margin option however you can!

Restaurants that may not have previously utilized curbside or delivery should consider doing so. If the logistics for delivery are not feasible for your restaurant, there are many third-party delivery services available that can do it for you.

Make sure your customers know you’re offering take-out, curbside, or delivery. These are extraordinary days for creative social media posts and campaigns. Update your website and utilize social media and email to keep people connected with what your business is doing to serve them during the pandemic. Consider offering free or discounted delivery to encourage customers who might not otherwise use that service to do so. Marketing campaigns should also make clear where customers can find your menu. Finally, reassure your customers about the additional steps you’re taking regarding sanitation and other health and safety measures you’re taking to stop the spread of the virus.

A note of caution: Make sure you understand the law. In Alabama, for example, you can’t serve a cocktail to-go no matter how artfully crafted it may be; purchases must remain inside a sealed container while being transported.

Employment Issues

Certain employees affected by COVID-19 will soon be entitled to additional paid sick leave. Under the Families First Coronavirus Response Act (FFCRA), signed into law last week and effective as of April 2, employers with fewer than 500 employees must provide 10 days of paid sick leave to full-time employees under specific circumstances related to the COVID-19 pandemic. This is in addition to paid sick time available under an employer’s existing policies. In return, employers will receive tax credits for paid sick leave wages provided under this new policy. Importantly for many restaurants, breweries, and distilleries, businesses with less than 50 employees can apply for a hardship waiver so that they do not have to comply with certain aspects of this new law.

Many businesses will find it very difficult to maintain normal staffing levels and be forced to make the difficult decision to lay off employees. Alabama recently issued new rules to allow some workers affected by the COVID-19 pandemic to file for unemployment benefits. To be eligible for benefits under these new rules, an employee must meet one of the following criteria:

  1. The employee is quarantined by a medical professional or government agency;
  2. The employee is laid off or sent home without pay for an extended period of time due to the coronavirus;
  3. The employee has been diagnosed with COVID-19; or
  4. The employee is caring for an immediate family member diagnosed with the virus.

Alabama employees may begin filing for unemployment benefits under these new rules right away. Unemployment benefits may provide needed assistance for employees during what will hopefully be a temporary setback for small businesses.

Because of the extensive media coverage and anxiety created by this pandemic, some employees may be afraid to come to work. Nonsupervisory employees may be able to refuse to work in situations where it is unsafe to do so. Hospitality businesses should therefore make sure to follow the CDC, OSHA, and other governmental guidance on maintaining a safe work environment. Businesses should also make sure employees are aware of and following this guidance.

Note, however, that the coronavirus is not an excuse to get out of work without appropriate grounds for doing so. Work with your employees who are sick, are taking care of family members who are sick, or are handling childcare duties because schools and daycares are closed. If, however, you have work to be done, employees who are not sick and do not qualify for paid leave, either under the FFCRA or company policy, should be at work. If they aren’t, work with them the best you can but you might have to find someone who can get the work done.

Help Is on the Way

Direct government assistance to small businesses will be available in the coming weeks. Qualified small businesses in many states, including Alabama, are eligible for up to $2 million in Economic Injury Disaster Loans (EIDL) from the U.S. Small Business Administration. These loans can help restaurants, breweries, and similar businesses pay for rent, wages, supplies, equipment, and other expenses. Other government programs are likely on the way as Congress considers stimulus proposals that may include additional aid to businesses affected by the COVID-19 pandemic. You should take advantage of all such opportunities. 

The COVID-19 pandemic has created unprecedented challenges for the hospitality industry, but these challenges are hopefully temporary. And by making smart business decisions and utilizing available resources, some hospitality businesses may be able to rise to these challenges and come out of this stronger than before. Take comfort in the words of the great REO Speedwagon — who was talking about riding out another kind of storm but may as well have been talking about the hospitality business today — “It’s a hard life to live, but it gives back what you give.” We’ll get through this.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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